Key Points
As revelations surface about Elon Musk's alleged. and the intricate web of personal and financial ties binding him to board members, questions loom large about the. board's independence..
According to a Wall Street Journal report, board members at Elon Musks electric-car maker Tesla were facing a dilemma in 2017, when one of their longtime directors, Steve Jurvetson, was embroiled in a scandal involving sex and drugs.Musk, who has deep personal and financial ties with Jurvetson and other directors, pushed for a lenient approach, allowing Jurvetson to take a leave of absence and then resign in 2020.The case highlights the potential conflicts of interest and lack of oversight at Tesla, where Musk's friends and allies dominate the board and benefit from his multibillion-dollar pay package...
The Jurvetson case is one of many examples of how Musk's cozy ties with Tesla board members raise questions about their independence and ability to oversee the billionaire entrepreneur, who has a history of erratic and controversial behavior.Multiple other directors of Musk companies have deep personal and financial ties to Musk, and have profited enormously from the relationship..
Such conflicts could run afoul of the loose rules governing what qualifies as independence at publicly traded companies.On Tuesday, a Delaware judge struck down Musks $56 billion pay package at Tesla, saying board members who signed off on it in 2018 were beholden to Musk.Several current or former directors at Tesla and SpaceX attend parties with him, go on exotic vacations and hang out at Burning Man, the Nevada arts and music festival.Musk and these directors, including venture capitalists Gracias and Ira Ehrenpreis, tech mogul Larry Ellison, former media executive James Murdoch, as well as Musks brother, Kimbal Musk, have invested tens of millions of dollars in each others companiesEllison held billions of dollars in Tesla shares with about a 1.5% holding in 2022..
These people (the board directors) were eviscerated by the judge," Elson said.The board may also face more pressure to address the issues raised by the Jurvetson case and other controversies involving Musk and his companies, such as his drug use, his conflicts with the SEC, his involvement in the SolarCity acquisition, and his plans to take Tesla private or merge it with SpaceX.The board may also have to deal with the challenges and opportunities posed by the rapidly changing and competitive landscape of the electric vehicle and clean energy markets, where Tesla faces rising competition from both established and emerging players, as well as regulatory and environmental uncertainties .The board may also have to balance the interests and expectations of Tesla's diverse and loyal fan base, which includes both retail and institutional investors, customers, employees, and enthusiasts, who have supported and rewarded Musk and his vision, but who may also demand more accountability and responsibility from him and his board .. (With inputs from agencies)..
